tv Worldwide Exchange CNBC October 11, 2013 4:00am-6:01am EDT
this is "worldwide exchange." i'm ross westgate. a recap of the headlines today, after weeks of drawing lines in the sand, president obama and house republicans are now looking for a way to end this scandal, reopen the u.s. government and avoid a potential default. stocks in europe, shares in royal mail deliver 36% higher than the issue price in conditional trade. and india's number two software services giant misses
on its second quarter, but shares gain on the u.s. rising picture as the u.s. recovers. plus, if you don't want the lights to go out, it is time to rethink policy. that's the message from the biggest energy companies. we'll hear from rwe. and if that's not enough, in an hour's time, it will be over to find out who won this year's nobel peace prize. >> yep. plenty to talk about today. we start off with breaking news from the ia, the international energy agency. the big thing to focus on here seems to be opec crude supplies down below 30 million barrels a day for the first time in more than two years. this has been led by steep declines in libya and iraq.
output down 29.9 million barrels a day. despite audi output topping 10 million barrels a day for a third month running. they raised the 2013 oil demand forecast to 91 million barrels a day, projected at 1 million barrels a day for 2013, as well. they're talking about exceptionally high u.s. crude refinery runs, as well. joining us for more, jason gallow, head of oil and gas research at la croix. jason, what do you make of the big outage or the big drop in opec supplies? >> it was to be expected because libyan operations have been under a lot of stress over the last several months, really. .it's related to security worker strikes at export facilities. so we were speccing the libyan number to be very low. we knew iraq had problems with their export facilities. i don't think either of these are systemic and i don't expect
them to be a problem moving forward, but the libyan political situation is very difficult to read right now. >> yeah. and they've had a slight uptick for demand in forecast because of the signs in european economy. if you're going to have problems with supply and slightly improving demand, how much of a floor is that providing? >> i think that the 105 is probably the fore and the near term and we look for prices to move up to $115 next year based on growing demand and continuing security problems. >> how does, meanwhile, the broader investment -- you know, we've got political problems in the u.s., we're going to be wondering about tapering out of the fed. how is the price being phased, as well, by the investment climate? >> i think it has a lot to do with it. there's been a strong correlation between the u.s. dollar and oil prices. and so it does have some influence in that regard. the political uncertainty will
tend to lead investment into essentially a hard commodity like oil. that can retain value, as well. >> to some degree, oil has been fairly steady, you could argue. say we've been trading well, 100, 115, something like that. is there anything that's going to change that range? >> brent oil prices averaged $111 in 20112, they average dollars $111 in 2012 and that's basically where we are today. there's a lot of volatility in that. the things we've talked about, the potential interruptions in supply can send it up and any concerns around the global economy can send it down. i think we're at a fair price for oil at these levels. >> what about fair price for the oirn oil majors? >> essentially while we've had a stable oil price, the cost structure of the industry has gone up with it. so the problem is that they're
not generating a lot of free crash flow. we're reasonably cautious on the group overall. we see names that have stronger cash cycles like bg that we think can perform very well. but we would be cautious about a broad weighting in integrated oil at this point. >> thanks very much for that. nice to see you, jason gymel from macquarie's. we have the nobel peace prize being announced in 55 minutes. there is a norwegian broadcaster saying opwc will win. so under, of course, the russia/u.s. deal struck last month regarding the chemical arms program, that's just a report from the norwegian site forecaster. we will know for sure, as i say,
in around about an hour from now. at the same time, white house and congressional staffers have been meeting through the night and early morning trying to negotiate a possible deal to end the government shutdown and avert a u.s. debt default. the president met with leaders for 90 minutes of the white house last night and it's described as a good session. the president heard house speaker john boehner explain a proposal for a short-term of debt ceiling, possibly six weeks to buy time to seek more spending cuts. probably returning to capitol hill, no deal was struck. the talks were constructive. >> we'll come back to have more discussion, the president said that he would go and consult with the administration folks and hopefully we can see a way forward. >> opening the government is a negotiation that will happen tonight. and in the hours ahead. and we hope to have it open by, you know, monday morning.
i know it's a holiday. >> republicans seem to be getting battered in opinion polls. the latest nnz/"wall street journal" poll finds 53% blame the gop and 31% bram president obama. only 24% view the gop positively. everybody two-thirds of people say they would fire everyone in congress, even those they like. thousands of workers are on furlough. but what about the serious consequences on the u.s. on shutdown? as so often happens, it's the animals that bare the brunt. bad news for poison ivy eating goats whose job it was to protect ft. hancock. this group of bucks have been sent home to a farm in new york instead of doing their bet to product this historical monument. regular vistas to the
smithsonian natural zoo would have been comforted they could keep an eye on the zoo's panda camp. but because of the cut, zookeepers have been forced to take down the live feed with a note telling users none of the live animal comes will be broadcast during the shutdown. apparently they are deemed a nonessential use of federal resources. how much of a use it is to have a camera running, i don't know. the former republican president is coming to the rescue. he's called the closier really, really sad and is offering to pay for the service himself. one wonders how much the electric bill is for that particular camera. finally, could this be the strangest shutdown consequence yet? normally when a bald eagle dies, the birds are sent to the national repository.
but she's been forced to store the eagle in her home freezer. maybe i should send it to a congressman instead she told local press last week. that's along with the sausages and the snake. why you have to store it in the freezer, i'm not sure. anyway, if you have any more weird shutdown stories, have you been affected on the slightly silly side, join us on the session at email@example.com, tweet @cnbcwex or direct to me @rosswestgate. >> as we are actually seeing politicians talk in washington, global equities have been firmer. just over an hour into the trading day in europe and advancers outpacing decliners by a ratio of nearly six to three. a little more than that, seven to three to be fair.
we saw the dow having the second best gains of the year. up 10 to 23 points, raising all the losses for the week. the ftse today, up 0.4%. the xetra dax is up a third. the cac 40 is fairly flat and the ftse mib is up 0.25%. 36% above the issue price royal mailed debuted in london. conditional just made the institution get to trade. other stocks we're looking at, as well, in the uk, lloyd's bank sold to westpack for $1.4 billion. vivendi is up 0.8% in paris. a court made a ruling for the french group. and ahead of fairly strong demand for the u.s. 30-year auction yesterday, treasury
yields at the moment, not quite sure why they're gray. 2.68%. remember, we were down at 2.62% at the beginning of the week. yields have backed back up as it looks like we may be averting debt, as well. the dollar index has been up at a two-week high bouncing off those layoffs. still away from the eight-month high of where we were. dollar/yen, 98.32. pound 1.5986. aussie lsh dollar, 0.9465. that's why we stand in this european trading session. sixuan is in singapore with the updated trading session. >> happy friday for asian markets. we have the nikkei 225 ending the day higher by 1.5% and gaining 2.7% on the week. a weaker yen against the dollar
lent support to exporter stocks in hopes of a u.s. deal to avert default is helping send markets into the green. and over in china, the shanghai composite rebounded a strong 1.7% to some two-week highs as investors having eyed in the next batch of economic data due out in the next couple of days. and a top central bank governor said the world's second largest economy's 2013 gdp will exceed 7.5%. the hang seng index in hong kong finished higher by 1.2% in south korea's kospi gained 1.2% by surging banking shares. and australia saw strong gains at 1.6%. as for individual movers, soft retailers in japan was sent tumbling smith after a dismal outlook. the operator of the door is the most heavily nikkei ending down by 2.3% today. free trades on concept check
necessary china led again the gains. working all these shanghai based stocks. a and orient international, up 10% in today's trade. back to you. >> thanks for that. shares trading higher, second quarter profits earnings miss analysts. india's number two services did narrow its fiscal 2014 revenue guidance to the top of its earlier 6% to 10% range. we will get more with scshibulal at 10:45 cet. some of europe's leading energy sources have called on
energymaker toes reform the energy policy. geoff is at that conference and joins us now. geoff, how much pressure is there on europe particularly compared to the u.s. on energy costs? >> yeah. no, this is becoming a more and more important issue, ross. and we've had the ceos that represent something like 50% of the generating power for europe just hold a press event saying we need to be moving in a different direction on this energy policy. shale gas in the united states has been an important differentiator. it means that costs are coming down for u.s. industry, but they're fought really coming down here in europe. 17% hike in prices for consumers. 21% forestry and business over the last four years.
that only looks like it's going to get worse. the cost of energy generation is going up. so let's listen in to some of the interviews that i did earlier, or some clips from some of the interviews that i did earlier just to hear what it is that the ceos want from government. >> today, the european energy policy is a trifle failure. it's a failure in terms of competitiveness. >> what we want is a european policy and that a market that is working. >> we want to address the point of citizens being aware that it's not the fault of the industry, it's the fault of overregulating and wrong regulations in play that we need to address. >> i'm very pleased to have with me ignacio and, sir, thanks for coming with us and giving us your time here. a lot of people might look at your business and they'll say, he made $4 billion euros core
profit in the first half of the year. what does he have to complain about? >> you have to put that in comparison with the assets. we had a company who handled $30 billion assets. so i think the profitability is very low. you compare with our eblt as well as the profitability, we are a sector, we have massive investment, massive real assets, but more than that, i think the main concern in these moments is not only because our profitability is coming down, it's just because we are seeing that europe is already losing competitiveness because of political -- wrong political action taken in the past. you mentioned that america has disregarded. but more than that, 50% of our bill has no related, no network.
and it has taken the decision to promote technologies which are ten times more prices than those which is already paid for in traditional ones. >> there were incentives for you to change the energy mix, but we've now seen the government .mr. rajoy remove some of those subsidies. now an introduction, of course, of caps, as well, price caps. do you feel that government are moving the goal posts because of their own political expediency? >> well, i think the point is that in spain, you mentioned, another country where we're making things in a similar way. they have to do something to stop the growth of the massive subsidies. we stop the construction and the technologies. in the case of spain, 5% of the production is solar.
20% of the cost of technologies, like hydro, 30% of the power is 28% of the cost. so it has no incentives to continue to use these technologies. now what they are trying to do is try to jar that first, those who are very competitive to pay for those who are immature. you cannot live without the 30% of hydro energy. >> what is your threat, then, to the politicians here in brussels and to the governments around europe? are you going to start turning off the lights? well, all week, the largest european companies, we are talking with single voice not only because of ourselves which has been -- we have offered tremendous value, more than 500
billion euros valued at treasury in our companies. but because we are worried, we are concerned, there's something to happen in europe, we continue this trend. we continue growth, we are not investing in certain areas like -- and meantime, the problem is bringing more problem to the network. and if anything happens, we would not like to be guilty for that because it's been taken not in the right direction. >> ibadrola owns the scottish power in the uk. a big political row has kicked off in britain. ffc has hiked prices way above the level of inflation. the leader of the opposition is threatening to put a cap on price rises for some years to come. how would you describe the intelligence of that policy?
>> well, i think greater is a country which is desperately needing to make huge investment. so probably is a country in europe that is more lack of investment in the last decade. so the investment is not made and that is something which certain spirits are already saying. is winter in the next two years, some blackout committees happen in the country. so to create some uncertainty around this is -- i think the international gas prices from the international prices will be delighted to be able to make so. but i feel that he has not enough knowledge and power to fix this. in britain, there are certain obligations with the program. it's already increasing our
costs in a tremendous manner. >> so saying what he's saying is reckless because it's creating uncertainty for investment? >> one of the things we have more, it's already broken down. it's been the major strength of the economic policy in britain. so all week we have already said that it will be clearing up. >> thank you so much, from
iberdrola. some interesting comments on the opposition's agenda in the uk, process. we're going to talk to rwe before we wrap up here at this event. that's coming up later in the program. back to you. >> and so of big spread for comments from ssc later today. they said if we change energy policy, it would save $100 off everybody eps energy bill. good stuff. come back to you, later. nintendo ups its game in the handheld gaming market. but is it any good? all eyes on u.s. banks. we'll head stateside to discuss the sector, particularly wells fargo and jpmorgan. we are just 40 minutes away from finding out this year's winner of the nobel peace prize. some russian president vladimir putin stand a chance? we don't think so.
welcome back, everybody. i'm geoff cutmore in brussels where ten energy leading ceos in europe have set out a policy agenda today where they want to persuade governments and politicians around europe to move to a new policy agenda. if that sounds a little bit cryptic, let's see if we can explore in some detail what this ultimately will mean. peter is with me, the ceo of rwe, the german energy generator. good morning to you and thanks for joining us. so what exactly is it you want to achieve in this meeting? >> it would clearly want to send out a signal, even more than the signal, sos. the sos not for us, the ten companies, not for the sector, but for europe as a whole. a prosperous society cannot be
prosperous without a good energy infrastructure. our energy structure is in jeopardy. >> but the commission has set out an agenda that moves us to a liberalized system that works across the whole of europe. now, that sounds like a pretty good idea to me. >> it is. it's a good idea. but on the leg of this european agenda, there are national agenda that's don't fit the european agenda. so the idea is good, but the practice is very often hindered by national different applications of the policy. >> isn't this just a consequence, though, of the difficulty economic cycle? that's put pressure on new companies that have invested into a renewable energy future. this is just a short phase in an economic cycle that will turn. >> i don't think so. we are currently shutting down power plants that are
technically and environmentally very efficient. but we are shutting them down because it does not acknowledge the operators plant. if you don't see economic trepdz will be picking up, we are facing a severe risk of blackouts throughout europe. >> the situation is different in other parts of europe. do we need to see a very clear switch in direction from angela merkel post the election now on the policy? it seems germany is going to abandon nuclear. >> germany is a very good example. i think you'll tell problems we face in europe are being seen there earlier than we will see them in the rest of europe. germany hs a renewable share of 25%. other countries will come there eventually and then they will have the same problems that germany has td. what are they? first of all, 25% renewables to a large degree in affordable tax
is very expensive. post the industry as well as consumers are under the burden of very, very high energy bills that's not sustainable in the long-term. tekdly, germany has on its own stepped out of nuclear. we think the safety issue is a political issue. i think that's nos something that energy companies can be decisive on. they just act in line with the decision. the shutdown of the power plants was done independently. there's a lot of wind and a lot of sun, if not, the borders would be opening to the neighboring countries and we would be able to push the excess electricity into the neighboring countries. if that was not the case, then the system would be dead in germany. they have initiated a lot of things. they cannot solve it on their own.
they need europe. >> would a green/merkel coalition be a disaster, then? it would only push a new government to pursue the policy mix that you've said is wrong even faster. >> that would be a very interesting combination. now, we're on some levels they have a lot of dominating ideas towards even more renewables and they give only a little to the cost of that. you see on state level, quite a lot of states in germany have a coalition where that works. but it's going to work eventually, i don't know. but what i do see is that the problems we are facing in germany, not only in the energy sector, but also the aftermarket of the euro crisis and the economic development, they really need a large democratic representation and a larger coalition. the larger it is, the more better than society and the better it is to make some of the brave moves we need to make moving forward. >> it's been a pleasure moving
forward with you. good luck moving forward. stick with us. we'll be back from brussels one more time. we're going to talk with the italian energy business. ross, back to you. >> all right, geoff, thanks for that. still to come, where are uk banks following their 37 billion pounds cash injection five years ago today? what does the future of banking look like as a further wave of regulation looms? more to come. long life ahead. big plans. so when i found out medicare doesn't pay all my medical expenses, i got a medicare supplement insurance plan. [ male announcer ] if you're eligible for medicare, you may know it only covers about 80% of your part b medical expenses. the rest is up to you. call now and find out about an aarp medicare supplement insurance plan, insured by unitedhealthcare insurance company. like all standardized medicare supplement insurance plans, it could save you in out-of-pocket medical costs.
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europe is at a severe risk of power blackouts. this year's nobel peace prize will be announced in around 30 minutes. likely candidates include the congolese gynecologist and mala ufasasi. roy scott is with us. we've had this announcement from a nor weekwegian broadcast eer the peace price will be won. i'm not convinced. i was under the impression that nominations for the award be put in in february/march time. its doesn't mean, of course,
that they might not change the rules. i suppose they can do what they like. the norwegians did get last year's winner right when they said the eu. >> that's right. we had the european union as our 25 to 1 sort of -- they were in the running. but in 25 memberships, we'll find out soon enough. >> you had denis mukwege and malala. >> malala has been our overwemg favorite since day one. 90% of the money has gone to malala. she's the people's favorite. but as you say, mcquade is hot on his heels, the gynecologist.
it will be abdomen interesting one. >> let's talk more about ma ula, the 16-year-old girl. extraordinary story. >> mala, she's been on the front and back of every newspaper in the last couple of months. there is a thought that the prize and the money and the publicity is meant to sort of, you know, raise awareness of a good cause. malala doesn't need any more awareness. she has plenty of publicity. that might be the only think that doesn't go for her this
time. you have the usuals that have been on the list, mary robertson, the former president of ireland, we've got facebook at 80 to 1. we've got putin at 100 to 1. and who knows, dennis rodman, you might get a late call after his valiant efforts in north korea. >> good to see you. thanks very much, indeed, for that. we'll see what happens. it will be revealed in around about 20 minutes time. and we'll bring that to you, of course. today marks the fifth anniversary of the 47 billion pound bailout in 2008. it was in 2008 when gordon brown injected money into the banks.
the british government unveiled a 6 of 1 million pound profit for treasury. stock in lloyd's in the last years down 24%. we have seen a recovery in the last two years from the lows. joining us for more, good to see you both. >> what does it have to offer today at this price? >> great signs. the prices are out today. we've seen the recovery. we've seen the improvements in the business models and specifically in the balance sheets of the banks. they've been selling down assets.
today is another prime example in lloyd's and another further disposal very much anticipated. but they're improving the businesses, they're reshaping them, they're refocusing them and becoming more of a kind of pure lay. uk bank now rather than the overly large trying to expand too quickly. we've had seen a lot of improvements recently and that's what's been driving the share price. >> and the big news has been how they're getting on with the barclay's and the skin. >> those two banks were the first two to put up their hands. both lloyd's and rbs because we have the reports coming out later this month about whether to split rbs into a good bank and a bad bank. it's about increasing lending to the real economy, whether that be begs but in terms of residential. so yes, they've been upping their efforts on how to buy the key portion of that. we get 15% capital release on
the government guarantee to buy mortgages. so it's not a bad deal. and no one i could find either within the bank of england or treasury could tell me whether if they passed on their fees to the consumer, whether they would end up mutual or sitting on a profit. so -- >> yeah. >> maybe i'm being cynical. >> i would argue looking at the numbers that we've seen in the rates that they've offered that the way we've modelled it looks as if they're quite attractive for the banks. to rbs and lloyd's both came out. obviously, we know who the largest shareholders are. crunching the numbers, they could return equity on this. so the numbers look relatively attractive, as well. >> and the deposit rates are looking to increase at the moment. mortgage rates are stickdy.
we certainly think there are attractions there to be a part of it. >> how much will they have been impacted by the fed tapering talks? it's bushed up rates. >> we've heard it first. we had a prewarning from a lot of the european banks where filtrating, the fixed next trading desks, we anticipate from the u.s. around 25% cut year on year. and that is what the focus will be, we think, for the american banks. so that will obviously have impacted it. what's been going on in fixed income has had a massive impact to revenue base. however, you see litigation potentially.
jpmorgan has been in the news a lot and there will by a lot of focus on that. >> thank you very much. stick around because it's about royal mail. it's enjoyed a strong jump in share price the first morning. 330 punch per share. shares are trading conditionally, but as you can see, they're currently at 444.67 per share. good one for the opposition. this one, you sold it too cheaply. why would they want to sell it in the first place, anyway? >> i think you're absolute lit rye. i think they were hoping and praying that they would get that very narrow increase of around 10%, nothing less, nothing more, and i think shooting up 36% on the open is going to open them up to huge criticism from the opposition, from labor, who has been chanting all week long and it's been sold on the cheap.
although the unions will tell you that there's a strike still coming. so you might see royal mail -- >> what is that for? >> the action that's coming in terms of the -- what is happening in the privatization and the unions being happy. there's a strike supposedly on the way. that could affect the share price. and today it might close slightly lower. >> why has this caught the imagination? >> well, i think it's kind of a third ipo of nationalized postal service. i think people see without the pension fund which the government took on to its own books, there is an opportunity for growth. investment is an area where royal mail hasn't invested previously because it's under
its partnership and in the uk it's so dominant, both in terms of parcels and letters. but we have a story online at the moment all about the facts that not only was it oversubscribed and that retail investors only got 749 quid, but many of the uk managers didn't get their allocation, either, going to several wealth funds, institutiones and a hedge fund. >> yes. anyway, thanks very much indeed for that. we'll take a short break. still to come, could a rebound in spending get india back on track? we'll be joined by the co-founder of the company here first on cnbc in just a moment. i love having a free checked bag
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9% to 10% from 6% to 10%. joining us now on cnbc is s.d.shibulal. let's kick off with the visa issues at the moment. where are we with that? and are we going to get some kind of civil settlement? >> so regarding the visa issue, we are engaged with the u.s. attorney's office and other government departments regarding the civil resolution of the government resolution into the company's complaints of issues. based on the status of these discussions, we have set aside $30 million including legal
costs this quarter. because the discussions are ongoing, we are not able to provide additional detail at this time. >> okay. so we'll have to see what happens. on the other hand, you have raised your -- narrowed the range of your growth outlook to 9% to 10%. what is happening particularly in your key u.s. market that is caution you to do that? >> actually, this quarter has been a fairly good quarter for us. we grew by 3.8% in the currency. the growth has been all announced. our top plan 3.7% and the remaining clients at 3.8%. we were also added a number of clients this quarter. our client division this quarter has been very strong. we added 67 new clients this quarter, net an additional 37.
our margins, if you remove the provision we have made has remained stable. 23.5% this quarter versus 23.5% last quarter. we have taken a privilege and as i just said of $35 million. it's gone up to 77.5%. our growth has been all around. retail by 1.4%. u.s. has done well, but when we look at the momentum, the u.s. momentum has marginally improved. europe is showing signs of early improvement. and they have groan this quarter. >> so traditionally, it was the
clients in those segments forecast on the compliance related spent. we are starting to see that based on new production introductions and new channels, digital consumer experiences. so those kinds of spends are starting to show up. we are seeing spends on abdomen lytics and big data. we are starting to see interest in the space. >> and finally, the repeat has been down at record low against the dollars. that must be unbelievably supported for you. so how much are numbers flatted by the weakness of the rupee? >> so 11% quarter on quarter from last quarter to this quarter.
at the same time, we have spent 3% on conversation. most of what we got out of the competition in greece, we have derived benefits from increase utilization. >> always good to talk to you. thanks so much indeed for joining us from infosys. have a good day. still a pretty picture for cannon's operating profit as the japanese cameramaker is seeing demand weakness weighing on its bottom line. joining us with more from tokyo, toshiko from the nikkei. >> that's right. canon's operating profits led somewhere around $2.4 billion. weakness is being blamed on falling demand for digital cameras in china and europe.
in order for canyon to meet its full year outlook, it will need a stellar selling season. oeshd, nikon shares are rallying, rising 4.2% on the securities upgrading its rating to buy. nomura says nikon's profitability is improving and it's getting an upper hand on competition. back to you. >> thanks for that. that's the latest from tokyo. other corporate news we're looking at, foxconn is in more hot wear over it's latent practices. its student intern worked all night shifts. singapore listed delmonte
pacific as paying $1.7 billion into the american company del monte foods. the deal will allow the u.s. firm to concentrate on its tech business and reunite into the del monte brand family. up 9.8%. the world's energy conference gets under way. we'll be on inflation watch in two of asia's top economies. and reliance industry reports japan, hong kong and indonesia all closed for holidays. and if consummation of the dreaded "s" word has you wanting to use a word of your own, by
"s" we need shutdown. we've been reporting some of the shutdown stories going on while we concentrate on the office. stars for the asteroid on program are staying at home and that's left the european space agency to capitalize for deadly space walks on its own. the inability of congress to act has impacted lots of businesses, including, it turns out, craft brewers. outrageous. anyone wanting to brew a new beer must first get approval for the atf. but they're not doing that during the shutdown. out up to 90 people who look
after the president and his family, what are the doing? the border between the u.s. and canada, there has been a federal government issue, because right now there is just one man, acting commissioner carl hipsley in charge of the entire u.s. canadian border. but speaking from his montana field office, he told the bbc that everything was under control from where he was sitting. it's 5,000 miles wide. share yao shutdown stories, e-mail us, the we'll take a short break. when we come back, the winner of the nobel paez priced will be announced. 0
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be awarded to the organization for the prohibition of chemical weapons for its extensive work for eliminating chemical weapons. during world war i, chemical weapons were used to a considerable degree. the geneva convention of 1975 prohibited the use but not the production or storage of chemical weapons. during world war ii, chemical weapons were employed in hitler's mass extermination. chemical weapons have subsequently been put to use on numerous occasions by both states and terrorists. in 1992 to 1993 it came into
port in 1997. since then, the opwc have through inspectiones and other means sought the implementation of the convention. 189 states have exceeded to the convention to date. the convention and the work of opcw have defined the use of the chemical weapons as a taboo in the international law. recent events in syria where chemical weapons have, again, been put to use have underlined the need to enhance the efforts to do away with such weapons. some states are still not members of opwc. certain states have not observed the deadline, which was april 2012 for destroying their chemical weapons. this applies especially to the united states and russia.
the norwegian committee has decided to do away with nuclear weapons. by means of the present award to opcw, the committee is seeking to contribute to the elimination of chemical weapons. i will not read the statement. the norwegian broadcaster was right. the organization for the prohibitive of chemical weapons overseeing the destruction of syria's chemical weapons has been awarded the nobel peace prize. i'm not even sure that they were in the original nominations, but anyway, that is what has been announced. here is a recap of the headlines we're looking at, as well. after weeks of drawing lines in the sand, president obama and
house republicans are exploring ways to end their standoff to reopen the u.s. government and avoid a potential debt default. stocks in europe, a little higher, but not quite share in the rest of the global rally. shares of royal mail opening up 36% higher than the issue price and conditional trade. india's number two software services giant, second quarter earnings giant, shares gain on a rising picture as u.s. demand recovers. plus, if you don't want the lights to go out, it's time to rethink possible. the rwe told this channel that power blackout necessary europe are a real possibility. >> we would clearly want to send out a signal, even more than a signal, an sos. the sos not for us, ten companies, not for the sector, but for europe as a whole. our energy sector is in jeopardy.
and a very warm welcome to you if you're joining us stateside. tech is best gains for the uk equities, s&p up 36 points. all on the fact that we now have some talks that may in the short-term at least lead to a delay of breaching any debt ceiling. wright now, though, the s&p 500 is about 2 points above fair value. the ftse cnbc global 300 is up 0.4%. we're not quite matching the strength of the u.s. markets today, but we are nevertheless
firmer, as well. the ftse has been up 0.4%. we'll show you the prices, as well, if we may, thank you. up two-thirds. the decks ra dax is up 0.3%. the cac 40 is fairly flat at the moment and the ftse mib is up 0.16%. now 2.69% is where we stand. we'll talk about what's happened on the short data t-bills, as well. gilt yields, 2.75%. atalia, we have an auction coming out for them, as well. the dollar/yen bouncing off the eight-week lows to a two-week high. euro/dollar, 1.3563. still away from that 1.3645. and dollar/yen moved off the two-month low of 96.55, currently trading at 98.34, as well. that's where we stand here in european trade.
. let's recap that asian session. swish wa sixuan is with us for the final time this week. >> thanks been ross. the nikkei is up 1.5%. a weaker yen against the dollar led support to exporter storks and over in china, the shanghai composite rebounded 1.7% thanks to positive september auto sales in hopes of more deals in the shanghai free trade zone. and a top central bank governor says the world's second largest economy 2013 gdp will exceed 7.5%. south korea's kospi grew by 1.17%.
fast retailing ended down by over 3%. meanwhile, free trade concepts in china are once again let in the gates after a report that finance and trade zone development entered an agreement to create an internet becaused service platform. if you look at these shanghai based companies, property developers lujiazui, jinqiao and orient international surged up by 10%. >> sixuan, have a great weekend. it will be starting for you shortly pop. meanwhile, white house staffers have been meeting through the night and into the morning trying to negotiable a possible deal. president obama met with republican leaders for 90 minutes thursday evening.
it was increase as a good session, possibly six weeks, some buying time to seem more spending cuts. upon returning to capitol hill, several said while no deal was struck, the talks were constructive. >> we'll come back to have more discussion. the president said that he would go and consult with the administration folks and hopefully we can see a way forwa forward. >> opening the government is a negotiation that will happen tonight and in the hours ahead. and we hope to have it open by, you know, monday morning. i know it's a holiday. >> we'll see what happens. republicans meanwhile continue to be battered in public opinion polls as americans hold them more responsible for the government shutdown. the latest cnbc/wall street journal poll finds 53% of people blame the gop. 31% blame the president. only 25% view the gop
positively. nearly 30% say they would fire everyone in congress, even those they like. at the same time, we see a lot of impact over the currency in short to dated t-bills. t-bill price up 21% in the last month. joining us is craig basey from sand man private investments. craig, good to see you. thanks for joining us. we saw quite a good auction yesterday and some bids for ten-year, but yields have just gone up in the last 24 hours. how volatile has the price been for the shorted dated t-bill? >> we're seeing some significant moves on shorter dated t-bills and particularly most of that volatility has been concentrated on near term t-bills. those that would be most effective. >> those under default.
>> yes. those maturing in september and october and later in the month in particular. in general, the longer dated t-bill res at sympathy lafr levels compared to six weeks ago. >> if we get this six-week extension, doesn't it -- i just means we're giving ourselves room the breathe and talk, but we're still not going to get in it any -- are we going to actually pass a budget? we haven't had one for three years. what does it mean? >> it means more near term uncertainty. perhaps confidence in the near term, perhaps business confidence will start to soften a little bit and see things trend on positive data that we
see earlier on in the year. >> we saw, of course, over the summer, bond markets pricing in a much speedier move, as you put it, move to treat interest rates and the fed started to taper. if we do sort of get through the politics of this, where do we -- how soon do we head back to that price action or, actually, is the world -- how different is the world going to be post the political crisis than it was in the summer? >> well, i think one of the key impacts was the fed was pricing tapering in. we now know that the fed are not in such a rush to taper and potentially there's mormon tear policy normalization to come a long time in the future. but certainly not as quickly as markets are pricing in.
our expectation would be in the near term that there could be more constructive price around treasuries and perhaps they can stable in a little bit more, pricing in a little less risk of interest rate normalization over the course of the next few months. certainly the -- >> 23% on sort of a ten-year, is that sort of a -- >> i think that's an attractive level for a lot of institutional investors. we're seeing a significant amount of demand coming through at that level. but there has been substantial demand in terms of the directed and the indirected. and that should -- i think that makes it very clear that there still is, as long as we get through this budget impasse, which i believe we will, there is substantial demand for u.s. treasuries over the next few
all right. energy companies are warning that unless we get major energy reform, the lights could go out. geoff, how serious is that statement or threat? >> well, i think it's a tap on the tiller, isn't it, for the commission. basically, these power companies have high debts for the investments they've made, profits are under pressure, and they're saying the things that governments are doing right now, like cutting back on subsidies for renewables are hurting us. who is to blame for all this? i asked the head of eni. >> i believe that both the european union and the national states have some responsibilities. now, in terms of gas, the key issue, the one we have to blame is america who found the shale gas and they created a gas market much more competitive than the european union.
now, in terms of electricity, there are both the national decisions who have been pushing up the price of european countries and also the europe union have have been not capable of managing their whole energy theme in europe. >> so why don't you have the commissioner ottinger here to tell him that it's the commission and the eu has has it wrong? >> you see, the commissioner is part of the problem. than another part of the problem is around competition. another piece is around vooirmt and the fourth is around the energy environment. so we shouldn't look just to the commissioner. what do you think the national government of italy is getting wrong, then, in terms of the energy mix at the moment? >> well, italian consumers, both
companies and families, are paying 13 billion euros of subsidies to renewables. in fact, it has done have wrong, 18% of the cost of electricity is around subsidies. now, how much of this is bearable for italian consumers, this is a question that italian government, as a matter of fact, is asking right now. so they are becoming more sensitive to this issue. >> can i ask you, then, about the situation with alitalia? are you going to cut off the situation with alitalia this saturday? >> reading the decision which have been taken yesterday night and more optimistic about that. because the key issue is around alitalia would be an ongoing concern one year from now.
now, in my answer is yes, then we will continue to supply. >> so is that a yes, you will cut off if they don't pay the bill? >> no, it's not a question of paying the bill. the question is do they exist one year from now or not? so the board of directors of alitalia today will take decisions as i've been reading the appreciate such that i am reassured about the fact that alitalia exists for ten years from now. if the answer is yes, i will continue to supply. >> so i managed to get a cheeky couple of questions in there on the alitalia story because the market has thought it that they don't get any more fuel after saturday while listening to mr. scleroni, that would not seem the be the case. but it all depends on how the board meeting goes today. but back to the issue, ross, that is part of the story.
as we've seen weakness in the economy in europe, companies like alitalia. they are not paying their bills. back to you. >> they need a proper restructuring, don't they, rather than just buying time. that's the latest for that. we have italian auction results out. they've raised the maximum to 4.75 billion and the yield on the three-yee were the lowest on the three-year, the lowest since february. so we've overcome the latest political hiccups that we were worried about last week. still to come, how nintendo is staying in the game. we'll look at the latest handheld console. ♪ ♪ [ male announcer ] eeny, meeny, miny, go. ♪ ♪
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with us now. presumably, the 3ds, my daughter has one of those. it is a 3d console. presumably, this is a version of that without the 3d, is it? >> you said the 2ds is a step up. it's actually a step down. the 3ds without the 3d functionality. >> is that because it's cheaper to manufacture if you don't put a fold on it? >> basically. it's one screen on one kind of slab. it makes more sense for kids. especially with the folding design, some kids were slapping it in half. you can't snap it, it's cheaper. it's releasing on the same day as pokemon x and y. >> is pokemon the driver? >> definitely. it's the driver for getting children to buy 3dss.
having a 100 pound version of it -- >> how under threat are actually game consoles generally from apps which, you know, my daughter spends a lot more time on there. on ipads and tablets and they can get an app -- you know, download an app free every weekend. we get comics and they get free apps. >> they're doing that more and more in the games industry, especially with parents giving their older version of their iphone or their ipad over to their kids. and there's a challenge in the industry, especially the handheld sector has been facing for many years now. they're more expensive, they last longer. >> they're expensive. >> they are more expensive, but
the value aspect there is equivalent. pokemon, kids will play that for 100, 150 hours. >> just on the handheld space, who is going to win out at christmas? >> i think apple perspective. within the hand hold console market, nintendo is totally dominant. sony's console has not picked up. >> thanks for that, kate, from ign. still to come, u.s. earnings season kicks off with jpmorgan and wells fargo. we'll get into that and what we can expect right after this.
this is "worldwide exchange." i'm ross westgate. president obama and house republicans are now exploring way hes to end their standoff to reopen the u.s. government as well as avoid a potential debt default. jpmorgan is due to report third quarter numbers before the bell. investors hope to get clarity on the u.s. banking giant's legal costs. and if you don't want the lights to go out, it's time to
rethink policy. this channel is being told power blackout necessary europe had a real possibility. >> we would want to send out a signal, not a signal, but an s is os for europe as a bhoel. our energy infrastructure is at jeopar jeopardy. plus, opcw wins this year's nobel paez peace prize. this is the organization currently in charge of destroying syria's chemical weapons. welcome to the start of your global trading day. pretty good start for the dow yesterday. the second best gains of the year for u.s. equities. the dow up 23 points. the s&p up 36 points. right now, the s&p is trading on
fair value, about 3 points lower for the nasdaq and the dow is just 4 points above fair value. so no real eagerness to move futures higher or lower this morning after those gains yesterday. european equities have been firmer this morning. the ftse yesterday was up 92 points, 1 is.5%. and we're about another 42 points higher at the moment, up around 0.6%. the cac 40 is flat. ftse mib is fairly flat. we had a fairly good auction as we did a short wile ago. yields on a 15-year auction. and on the three-year, the lowest level since may. so fairly well received auction for italy. so what are investors to do on this last trading day of the week as we go into the weekend? here is a recap of some of the thoughts we've had today. >> demand has been very strong.
industrial production is not generating metals. copper, i think, i'm more concerned with where we're bell in six months. >> we sold the 50/60, and we're buying the negative 35. 12k3w4r we've been bearish on bonds, government bonds at the same time. government bond yields have risen. so the u.s. treasury yield has gone from 1.6 -- >> tripled. >> that is the trade of the day. we will be going out to washington, d.c. for the latest in the talk toes reopen the government and avoid the debt
ceiling. before that, jpmorgan reports quarterly results at 7:00 eastern. the bank is forecast to earn $1.21 a share, down from $1.40 a year ago. that's on revenue of $24 billion. the company is looking to settle several probes in its mortgage business. wells fargo, the biggest u.s. mortgage lender and has been hit by the drop in refinance activity as interest rates have risen. mam mccormick is joining us this morning. thanks very much for joining us. the first line of your note is i'm not optimistic about results for jpm or wfb. why? >> ross, they had a very
difficult quarter last year. mainly -- or last quarter due to the fed and their taper or nontaper decision. it caused a spike in rates. it caused the re-phi trade to go away. obviously, we're dealing with political dysfunction in the u.s. and i think a murky outlook in our economic view here. so i think there's -- the areas where they did get revenues from re-fi is diminishing. the other areas where we get revenues, the trading fixed income or equity as well as investment banking issues are diminishing. obviously, they have strong regulatory and legal risks. so i think there is something where they may beat on quarterly estimates. but i think revenue will be week and the outlook is gloomy. >> i thought net margins are better. won't that have offset things? >> i think it will help a little bit and probably the revenues from their wealth management units. but i think it's not going to be enough, ross. and i think when you look at what people are -- when you use banking services, ultimately, to
discretionary purpose, either for houses or investments or others, and i think consumer sentiment is diminished, obviously, the fed has lowered their gdp outlook. i think when you look at retail sales and holiday sales, the outlook is gloomy, as well. i think people will be reluctant to the point of capital. and i think when you look at the u.s. political noise, that's going to impact it, as well, to the negative. >> yeah. except the fed taper, we talked about the impact of that rising market rates. it's now off the table. is this quarter going to be better as a result or not? >> i don't think so. and i look at both the wells fargo and jpmorgan's actions. they are firing loan originators in droves. if people thought optimistically about the economy, they would naturally be inclined to purchase more homes. if wells fargo and jpm believes
housing was trending, they would be adding more people, not deextracting. but when you look at the situation, wells farg dwroe and jpmorgan are business machines. when they are pulling away, you think when you look avenue these stocks earlier up 20% to day, it behooves investors to go to other quality trading representatives. and let's talk about jpmorgan this second. how much proinvestigationing is there going to be on legal? >> i estimate between $2 million and $3 million. they have beat 17 out of the last 18 quarters, mainly from taken from loan loss reserves, which could be anywhere from 1 is.25 to 2 billion. when you look at the revenues
and outlook, that's the key point i'll be focusing on. when you look at the legal risk right now, it is a real risk and i think it's something investors should look elsewhere or take some profits in jpmorgan. >> u.s. government has jamie dimon in their cross hairs. what do they want? >> they want his head. >> why? >> jamie dimon was one of the biggest opponents of dodd frank. and the government didn't like it. and you look at what's happening, sources say bac or something else. when the government is not pleased with you, they're going after him increasingly. the focus is going on to to be on this announcement. how much more legal reserves can they have. it is something that jamie dimon has irked the government
regulators and this is payoff, ross. >> always good to see you. mike mccormick. two other banking stories of note, as well. one concerning jpmorgan. it sold off all the short-term debt in its money market funds. the bank has increased its liquidity position. jpm says while the likelihood of the u.s. debt fault has been low, it has been taking precautions to protect investors. and the new york fed is being sued by a former bank examiner who claims she was fired because of goldman sachs. they interfered with her aminhe bank. she had criticized goldman for not having a complex in place. she claims her superior told her to change her findings and then was fired because she refused to do so.
white house and congressional staffers vg meeting through night trying to avert a u.s. debt default. cnbc's hampton pearson is in washington with the latest. hampton, what do we understand they're talking about? where is the movement? >> how are you doing, ross? these talks come after president obama met with house republican leaders for about 90 minutes at the white house thursday evening. now, both sides described that meeting as a good session. the president heard house speaker john boehner explain a proposal for a short-term extension of the debt ceiling, possibly for about six weeks. that would buy the gop time to seek more spending cuts. president obama pushed to reopen the government which has been partially shut down since october 1st. what may be more significant is republics now appear to be steering clear of the limits on president obama's health care law and spending that led to the current crisis. upon returning to capitol hill, several gop lawmakers say while
no deal has been struck, the talks, indeed, were constructive. >> we'll come back to have more discussion. the president said that he would go and consult with the administration folks and hopefully we can see a way forward. >> opening the government is a negotiation that will happen tonight. and in the hours ahead. and we hope to have it open by, you know, monday morning. i know it's a holiday. >> now, republicans continue to be battered in public opinion policy as merns hold them more responsible for the government shutdown. the latest cnbc/wall street journal poll finds 53% blame the gop and 0.15% support president obama. nearly two-thirds of people say they would fire everyone in congress, even lawmakers they like.
overall, 78% believe the u.s. is headed in the wrong direction. president obama has invited senate republicans for a meeting at the white house around 11:15 a.m. eastern time today. ross. >> hampton, thanks for that lining there. that's the latest from washington. joining us for more is julian, democratic strategist at law media group for analysis. julian, we finally have some movement, but are we -- you know, are we going to get anything more than sort of an agreement to extend the debt ceiling for six weeks? then i've got to worry here, we just keep coming back to this without ever getting any broad agreement on budget or, you know, debt sustainability. >> yeah. well, i think that's a fair worry. i think yes, we are on a track towards an agreement. i think certainly in the short-term is hampton errreport i think we're likely to get an extension and kicking the can down the road on budget
extensions and debt negotiations. the reason you're sooep seeing that is republicans are cratering in the polls. the public is by a very, very strong margin blaming the republican party for this kind of -- this sector that we've seen over the last couple of weeks. they hold republicans far more accountable. and generally what you see during these budget negotiations, remember in 1995 it was very similar. one party wins the didn't, the other party loses the debate. republicans have clearly lost this debate. so they are -- i think they have concede today argument on the health care point that they were trying to make. they were trying to reopen obama care. they've lost that argument. i think the public is very, very negative about using the debt ceiling as a codule in the budget negotiations. i think republicans are worried they're going to lose that debate. and i think at the end of the day what you'll see six weeks from now is some kind of negotiation going on over entitlement reform, over tax
reform. that's fine. there's no reason we ever had to come to this showdown to get ta done. one with go through the normal budget process, the way these things are normally done is one goes through the normal budget process during the course of the year. they develop a consensus, one party develops strikes, develop a consensus on both tax policy and spending policy and then you go through a normal negotiation through a normal timeline. >> we haven't been able to agree on anything, though, for two or three years. just going back to the -- >> that's not entirely true. >> nobody took one in the poll, 60% in that same poll want to fire all the guys on capitol hill. 78 fers saying they're going in the wrong direction. i'm afraid whichever party you represent, politicians have let the country down. >> yeah, i think people are very, very frustrated in this country with the persistent and perpetual political impasse. there's no question about that. and i think there is a bit of
a -- on both houses, also no question about that. but these debates have a winner and a loser. and there's no question the republicans and all of the polls r showing that the republicans have lost this debate. i think there is some prospect for some kind of agreement at the end of the double here. there's certainly, i think president obama has signed into law almost $4 trillion in deficit reduction at this point. and he has said -- he has said in a very nixon goes to china way, he has said he very much is open to the idea of further discussions and further consensus on both tax reform and on entitlement reform. so this is not been a president that has been unwilling to negotiate on these two issues. it's absolutely unnecessary that we had to go through this process of a government shutdown and this kind of bring ksmanshi. the president has been supportive. >> do you think we can get to a
stage where the majority of republican party are able to accept some tax increase and the democrats and the president will have to accept further entitlement or spending cuts? because that seems to me what needs to happen. >> i'm not sure about tax increases at this point. i think people are talking about tax reform that would be tax neutral. and the question is what is on the stabtable there and that's little unclear. i think we do need entitlement reform as a democrat and a progressive. i think sometimes progressives have been slow to come to the table on this. when you combine entitlement reform and service on the debt, you're going to be talking somewhere close to 60% or 70% of the budget. so i think it's in the long-term interest of both parties to be talking about entitlement reform because of the trend lines, particularly on health care entitlement. so i think that there is certainly some common ground that both parties can find both on taxes and entitlement. you just have to do it in an environment that is not kind of a negotiating environment where one party has the gun to the
head of another party with this government shutdown or a threat of not raising the debt ceiling. these are environments that are not conducive towards getting agreements on very, very complicated issues on both taxes and entitlements. again, the normal way this is done is building consensus over proposals and that takes many, many months to do that. >> that would be nice. >> that would be nice if we could do that. >> it would be nice. >> julian, good to see you this morning. thanks very much for joining us. now, at the same time, if constant mention of the "s" word, shutdown, if you want to use some choice language of your own, let us know. some 97% of nasa workers are apparently on furlough with the astronauts on board the international space station notable exceptions. stars of the asteroid watch program in pasadena are staeg hope. who is going to protect us from
a hit? the european space agency has to do it on their own. the closing down of the government has affected many areas, including craft brewers. anyone with who wants to launch a new beer has to have a permit and although the president goes to work, the president can't be said for his staff. he has 90 people usually looking after the white house, but only 15 people have been kept on. i don't know if that means he has to make his own cup of tea. i'm not sure how that works. finally, believe it or not, just eight field offices are tasked. eight are normally tasked with maintaining the 5525 board honor between the u.s. and canada. it's normally eight when the government is up and running fully. but right now, that entire border is monitored by just one man, acting commissioner carl hipsly. speaking from his montana field
office, he told the bbc that everything is under control. one man, 5,000 miles. he has big arms. that is the long arm of the law. and one other area that has been arvegd, if you go to the palodium national zoo, you've always been comforted to know you can view the pandas by the zoo's panda cam. but they have a note on the site that none of the animal cams are broadcast during the show. however, newt gingrich has called the closier very, very sad and he's offering to pay for the service himself. well done. how much it pays to throw a switch, i don't know. but there we go. those are some of the more unusual impacts on the shutdown. google is under secretmy
again. see the story on our website and follow us on twitter. we'll take a short break. when we come back, the trading day ahead. mine was earned orbiting the moon in 1971. afghanistan in 2009. on the u.s.s. saratoga in 1982. [ male announcer ] once it's earned, usaa auto insurance is often handed down from generation to generation because it offers a superior level of protection and because usaa's commitment to serve current and former military members and their families is without equal. begin your legacy.
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in order to go visit my family, which means a lot to me. ♪ we're getting positive action here. it was great to see that rebound yesterday. we have to learn to trust the tape. we're not paid to predict events. we're paid to analyze what we think the market is going to do and how we think the market is going to overreact. i think we were sharply oversold. it shows the resiliency. considering all that's happened, the nasdaq made relative new highs last week and we're within striking distance for the s&p again. >> they are talking in washington, so that gave us a bit of a lift, adam. what are the key levels for you
on the s&p? >> well, the last high was 1727. but we got to the halfway point. we're at the 1680 level. i'd like to see it close for the week above that. but essentially, last week, we were unchanged. this week we're a little positive. but i think the reaction to keep an eye on is the nonreaction that we haven't seen in gold nor flights to the dollar nor bonds. bonds turned over yesterday. and when i was a kid back in '95, '96, this happened the last time. the bond market got bought up and bid up like crazy because people wanted that safety. that did not happen at all this time. so i think the market is moving forward. a lot of these stocks are on key levels of support. lean on 50 in wells fargo. lean on 36 in coca-cola. lean on 31 in microsoft. so there are a lot of stocks that have great rewards or risks at these levels >> have a good day. thanks for joining us. that's the latest from chicago. that's it for this week on
good morning. day 11 of the government shutdown. hopes of a deal are rising above. and the global markets taking notice, obviously. yesterday, it's friday, october 11th, 2013. that's the day. and "squawk box" begins right now. ♪ >> good morning, everybody. happy friday and welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. and there are some signs of progress out of washington. capitol hill staffers negotiated late into the night and there is another white house meeting this
morning between president obama and senate republicans. after the president's meeting with republicans yesterday, the white house signaled that it may back the gop plan to temporarily raise the debt ceiling and prevent a historic default. >> the president is happy that cooler heads, at least, seem to be prevailing. in the house. that they're at least seems to be a recognition that default is not an option. >> house majority leader eric cantor. >> the president said that he would go and consult with the administration folks and hopefully we can see a way forward after that. >> speaking to larry kudlow last night, the vice chairman of the house republican conference sounded optimistic. >> opening the government is a negotiation that will happen tonight. and in the hours ahead. and we hope to have it open by, you know, monday morning. i know it's a holiday. >> mar